Societe Generale is reportedly in advanced discussions with French asset manager Amundi and US-based State Street over the sale of its asset management arm, Lyxor.
Reuters reported citing four sources that Amundi and State Street are finalising rival bids for Lyxor after other interested parties backed out over its valuation.
The French banking group is looking to boost profitability through the sale of Lyxor, which is being valued at about half the $1.2bn (€1bn) it is targeting to rake in through the sale.
The sources said that the bidders are only willing to offer around €400m to €500m owing to growth challenges and the effect of the Covid-19 crisis on its business.
Germany-based DWS and US-based asset manager Northern Trust were the latest of bidders who dropped out of the bidding process, they added.
The news of Societe Generale planning the sale of Lyxor was reported last year, with the decision said to be the result of a strategic review. The company hired Citigroup to manage the sale.
“It’s a tricky carve-out and it will take time before the unit can be disentangled from the rest of the bank,” one of the sources told the news agency.
ETFs account for around half of Lyxor’s business. The business is the third-largest ETF provider in Europe. As of February, it had €164.4bn in assets under management and advisory.
In November 2019, Lyxor expanded its presence in Germany by finalising the combination of its €16bn business with Commerzbank’s asset management activities.
This followed the acquisition of Commerzbank’s equity markets and commodities business by Societe Generale in the previous year.
Other moves by Societe Generale
Societe Generale reported a net loss of €258m in 2020, its first loss in decades.
Last month, the banking group appointed Mathieu Vedrenne, head of Societe Generale Private Banking France, to its Group Management Committee.
In January this year, the banking group selected Azqore, part of Indosuez Wealth Management, to manage IT systems and back office operations outside of France.